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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

History

Pt 3-1 inserted by No 46 of 1998.

Division 104 - CGT events  

History

Div 104 inserted by No 46 of 1998.

Subdivision 104-C - End of a CGT asset  

SECTION 104-25  Cancellation, surrender and similar endings: CGT event C2  

104-25(1)  

 ITAA 36
CGT event C2 happens if your ownership of an intangible *CGT asset ends by the asset:


(a) being redeemed or cancelled; or


(b) being released, discharged or satisfied; or


(c) expiring; or


(d) being abandoned, surrendered or forfeited; or


(e) if the asset is an option - being exercised; or


(f) if the asset is a *convertible interest - being converted.
 View history reference

History

S 104-25(1)(f) amended by No 163 of 2001. For application provisions, see note under Div 974 heading.

S 104-25(1) amended by No 94 of 1999.

104-25(2)  

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The time of the event is:


(a) when you enter into the contract that results in the asset ending; or


(b) if there is no contract - when the asset ends.

104-25(3)  

 View history reference ITAA 36
You make a capital gain if the *capital proceeds from the ending are more than the asset's *cost base. You make a capital loss if those capital proceeds are less than the asset's *reduced cost base.

Note:

The capital proceeds referred to in this subsection are reduced if the gain or loss was for shares and an amount was taken into account as a capital gain for the shares under former section 160ZL of the Income Tax Assessment Act 1936 for the 1997-98 income year or an earlier income year: see section 104-25 of the Income Tax (Transitional Provisions) Act 1997.

History

S 104-25(3) amended by No 101 of 2006, s 3 and Sch 2 item 679, by amending the reference to a repealed inoperative provision in the note, effective 14 September 2006. For application and savings provisions see the CCH Australian Income Tax Legislation archive.

S 104-25(3) amended by No 114 of 2000.

104-25(4)  

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A lease is taken to have expired even if it is extended or renewed.

Exceptions

104-25(5)  

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A *capital gain or *capital loss you make is disregarded if:


(a) you *acquired the asset before 20 September 1985; or


(b) for a lease that you granted:

(i) it was granted before that day; or

(ii) if it has been renewed or extended - the start of the last renewal or extension occurred before that day.
 View history reference

Note 1:

There are other exceptions if:

· your lease expires and you did not use it mainly to produce assessable income: see section 118-40; or
· you exercise rights to acquire shares or units: see section 130-40; or
· you acquire shares or units by converting a convertible interest: see section 130-60; or
· you exercise an option: see section 134-1.

Note 2:

A company can agree to forgo any capital loss it makes as a result of forgiving a commercial debt owed to it by another company where the companies are under common ownership: see section 245-90.

Note 3:

A capital gain or loss a company makes because shares in its 100% subsidiary are cancelled (an example of CGT event C2) on the liquidation of the subsidiary may be reduced if there was a roll-over for a CGT asset under Subdivision 126-B: see section 126-85.

Note 5:

Cost base adjustments are made only under Subdivision 125-B if there is a roll-over under that Subdivision for CGT event C2 happening as a result of a demerger.

Note 6:

A capital gain or loss made by a demerging entity from CGT event C2 happening as a result of a demerger is also disregarded: see section 125-155.

Note 7:

A capital gain or loss you make from the meeting of your entitlement under Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 or Part VC (Financial claims scheme for account-holders with insolvent general insurers) of the Insurance Act 1973 is disregarded: see sections 253-10 and 322-30 of this Act.

History

S 104-25(5) amended by No 135 of 2015, s 3 and Sch 1 item 1, by repealing note 4, applicable in relation to CGT events happening after 7:30 pm, by legal time in the Australian Capital Territory, on 8 May 2012. Note 4 formerly read:

Note 4:

A capital gain on the repayment of certain debt given to an ultimate holding company is disregarded where an entity obtains a roll-over under Subdivision 124-M for interests acquired or cancelled: see section 124-784.

S 104-25(5) amended by No 79 of 2010, s 3 and Sch 2 item 27, by omitting "of Schedule 2C to the Income Tax Assessment Act 1936" after "see section 245-90" in note 2, effective 1 July 2010.

S 104-25(5) amended by No 42 of 2009, s 3 and Sch 1 item 18, by inserting note 7 at the end, effective 23 June 2009.

S 104-25(5) (note 1) amended by No 163 of 2001. For application provisions, see note under Div 974 heading.

S 104-25(5) amended by No 90 of 2002, No 173 of 2000 and No 89 of 2000.

History

S 104-25 inserted by No 46 of 1998.


 



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